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array vendor Compellent Technologies, with data management the top priority.

Senior vice president of Dell's enterprise product group Brad Anderson said during a conference call today that Dell's storage is "as competitive as any in the market place," but it will continue to look for more investments.

"Storage will continue to be an attractive area to expand in," he said. "We see opportunities to make additional storage investments, particularly around data management. We may add other components."

Anderson also said Dell sees Compellent SAN arrays as filling a "broader space" in the market than 3PAR, considers Compellent products complementary to EqualLogic and will continue to offer EMC Corp. storage products.

Dell got Compellent for significantly less than the $2.35 billion that Hewlett-Packard (HP) Co. paid to outbid Dell for 3PAR. However, industry experts wonder how much the Compellent Storage Center systems expand its portfolio while customers question if Dell can continue to provide the service and support they expect from Compellent.

"This is a positive note for Dell, but it needs to rationalize its storage and associated management vision, as well as the overlap it now has in the [small- to medium-sized business] SMB and midmarket with Compellent and EqualLogic," Server and StorageIO analyst Greg Schulz said.

Dell executives said they expect the Compellent deal to close early next year, but the companies signed a reseller deal that lets Dell sell Compellent Storage Center SANs immediately.

Dell was outbid by HP earlier this year for 3PAR, but answered by picking up Compellent in its biggest storage acquisition since it acquired iSCSI SAN vendor EqualLogic in early 2008 for $1.4 billion. In smaller deals this year, Dell acquired the IP of clustered NAS vendor Exanet and primary data reduction vendor Ocarina Networks.

Dell portfolio crowded in midrange

Compellent's Storage Center SAN is a midrange storage system, which competes with EqualLogic although it supports Fibre Channel as well as iSCSI. Dell puts EqualLogic annual revenue at around $1 billion, more than 10 times EqualLogic's revenue as a standalone company.

But Anderson described Compellent as a midrange and high-end product, and said it typically sells in larger deals than EqualLogic.

"Compellent today is principally sold at $100,000 and above, while most EqualLogic sales are in the $50,000 space," Anderson said. "There's not a tremendous amount of overlap. They're both based on the same principals -- virtualized storage, automation and intelligent management. Compellent is an incredible complementary extension on top of EqualLogic."

Comparing Compellent to 3PAR, Anderson and Compellent CEO Phil Soran said Compellent often competed with and beat 3PAR in the market.

Dell also sells EMC Clariion SAN, Celerra unified storage and Data Domain disk backup systems through an OEM deal. However, the Dell-EMC partnership has already been strained by Dell's acquisition of EqualLogic and its attempt to buy 3PAR. EMC CEO Joe Tucci has addressed this relationship in recent conference calls, saying it has cooled off but that he and Dell CEO Michael Dell were working on rebuilding it. However, it is unlikely that Dell's acquisition of another EMC competitor will help matters.

You could actually hear moans from some of our techs when they read about the deal.

David DaviesCIOFlight Options

Anderson said Dell will still offer EMC storage, but seems more committed to servicing the 24,000 or so customers who have already bought EMC storage from Dell. "We have spent a lot of time with EMC the last few days, and we're both absolutely committed to doing the right thing for joint customers," he said.

When asked if Dell was as committed to selling EMC to new customers, Anderson said Dell would continue to give customers the option of buying EMC products. Still, many wonder how the companies can keep a strong alliance while competing for many deals.

"Publicly I expect to see a spin on it that they will still partner where customers want or need the EMC products," Schulz said. "However, I would expect to see the gloves start to come off at least within specific product groups."

Anderson said Dell has signed retention letters with all Compellent senior executives, and all Compellent employees will be offered positions with Dell. Dell will also keep Compellent's Eden Praire, MN, headquarters.

Customers worry about support

But can Dell keep Compellent's loyal customers happy? The CIO of jet leasing firm Flight Options, which uses Compellent storage and HP servers, said the initial reaction to the deal was negative in his shop.

"You could actually hear moans from some of our techs when they read about the deal," Flight Options CIO David Davies said. "Hopefully, Dell will be able to find a way to keep the service and support areas separated, but I would imagine we will start seeing some Dell influence fairly quickly."

Davies said he has been happy with Dell's on-site laptop repair service, but had problems with its enterprise hardware support in the past. "That is our biggest concern in regards to the acquisition," he said. "As someone who has integrated numerous companies in the past, I can tell you that your customers will be the ones to tell you if the integration was successful.

"Savings that can be achieved by a successful integration can easily be overshadowed by a customer base that is adversely affected. The resulting loss in goodwill from your customer base can almost never be completely recovered."

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